Senate Bill 1694

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    Florida Senate - 1998                                  SB 1694

    By Senator Ostalkiewicz





    12-1537-98

  1                      A bill to be entitled

  2         An act relating to taxation (RAB); amending s.

  3         212.08, F.S., relating to the tax on sales,

  4         use, and other transactions; revising the sales

  5         tax exemption provided for food and drinks;

  6         providing definitions; exempting additional

  7         medical supplies and equipment; providing

  8         definitions for purposes of such exemption;

  9         revising the exemption for school books and

10         school lunches; providing exemptions with

11         respect to parent-teacher organizations and

12         associations, to schools with grades K through

13         12, to mobile home lot improvements, and to

14         sales of certain personal property supported

15         through the Veterans Administration; providing

16         a partial exemption for certain commercial

17         fishing vessels; providing an exemption for

18         certain foods, drinks, and other items provided

19         to customers on a complimentary basis by a

20         dealer who sells food products at retail;

21         providing an exemption for foods and beverages

22         donated by such dealers to certain

23         organizations; revising provisions relating to

24         the technical assistance advisory committee

25         established to provide advice in determining

26         the taxability of specific products; providing

27         membership requirements; directing the

28         Department of Revenue to develop guidelines for

29         determining the taxability of specific

30         products; requiring that the department notify

31         persons substantially affected and the

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  1         Administrative Procedures Committee of proposed

  2         guidelines; providing for use of the guidelines

  3         by the committee; providing for determining the

  4         taxability of specific products by the

  5         department; authorizing the department to

  6         develop a central database with respect to the

  7         taxability of specific products; providing an

  8         effective date.

  9

10  Be It Enacted by the Legislature of the State of Florida:

11

12         Section 1.  Subsections (1), (2), and (14), paragraph

13  (q) of subsection (7), and paragraph (a) of subsection (8) of

14  section 212.08, Florida Statutes, are amended, and paragraphs

15  (qq), (rr), (ss), (tt), and (uu) are added to subsection (7)

16  of that section, to read:

17         212.08  Sales, rental, use, consumption, distribution,

18  and storage tax; specified exemptions.--The sale at retail,

19  the rental, the use, the consumption, the distribution, and

20  the storage to be used or consumed in this state of the

21  following are hereby specifically exempt from the tax imposed

22  by this chapter.

23         (1)  EXEMPTIONS; GENERAL GROCERIES.--

24         (a)  Food products for human consumption are exempt

25  from the tax imposed by this chapter.

26         (b)  As used in this subsection, the term "food

27  products" means edible commodities, whether processed, cooked,

28  raw, canned, or in any other form, which are generally

29  regarded as food. This includes, but is not limited to:

30         1.  Cereals and cereal products, baked goods,

31  oleomargarine, meat and meat products, fish and seafood

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  1  products, frozen foods and dinners, poultry, eggs and egg

  2  products, vegetables and vegetable products, fruit and fruit

  3  products, spices, salt, sugar and sugar products, milk and

  4  dairy products, and products intended to be mixed with milk.

  5         2.  Natural fruit or vegetable juices or their

  6  concentrates or reconstituted natural concentrated fruit or

  7  vegetable juices, whether frozen or unfrozen, dehydrated,

  8  powdered, granulated, sweetened or unsweetened, seasoned with

  9  salt or spice, or unseasoned; coffee, coffee substitutes, or

10  cocoa; and tea, unless it is sold in a liquid form.

11         3.  Bakery products sold by bakeries, pastry shops, or

12  like establishments that do not have eating facilities.

13         (c)  The exemption provided by this subsection does not

14  apply:

15         1.  When the food products are sold as meals for

16  consumption on or off the premises of the dealer.

17         2.  When the food products are furnished, prepared, or

18  served for consumption at tables, chairs, or counters or from

19  trays, glasses, dishes, or other tableware, whether provided

20  by the dealer or by a person with whom the dealer contracts to

21  furnish, prepare, or serve food products to others.

22         3.  When the food products are ordinarily sold for

23  immediate consumption on the premises or near a location at

24  which parking facilities are provided primarily for the use of

25  patrons in consuming the products purchased at the location,

26  even though such products are sold on a "take out" or "to go"

27  order and are actually packaged or wrapped and taken from the

28  premises of the dealer.

29         4.  To sandwiches sold ready for immediate consumption

30  on or off the premises.

31

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  1         5.  When the food products are sold ready for immediate

  2  consumption within a place, the entrance to which is subject

  3  to an admission charge.

  4         6.  When the food products are sold as hot prepared

  5  food products.

  6         7.  To soft drinks, which include, but are not limited

  7  to, any nonalcoholic beverage, any preparation or beverage

  8  commonly referred to as a "soft drink," or any noncarbonated

  9  drink made from milk derivatives or tea, when sold in cans or

10  similar containers.

11         8.  To ice cream, frozen yogurt, and similar frozen

12  dairy or nondairy products in cones, small cups, or pints,

13  popsicles, frozen fruit bars, or other novelty items, whether

14  or not sold separately.

15         9.  To food prepared, whether on or off the premises,

16  and sold for immediate consumption. This does not apply to

17  food prepared off the premises and sold in the original sealed

18  container, or the slicing of products into smaller portions.

19         10.  When the food products are sold through a vending

20  machine, pushcart, motor vehicle, or any other form of

21  vehicle.

22         11.  To candy and any similar product regarded as candy

23  or confection, based on its normal use, as indicated on the

24  label or advertising thereof.

25         12.  To bakery products sold by bakeries, pastry shops,

26  or like establishments that have eating facilities, except

27  when sold for consumption off the premises.

28         13.  When food products are served, prepared, or sold

29  in or by restaurants, lunch counters, cafeterias, hotels,

30  taverns, or other like places of business.

31         (d)  As used in this subsection, the term:

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  1         1.  "For consumption off the premises" means that the

  2  food or drink is intended by the customer to be consumed at a

  3  place away from the dealer's premises.

  4         2.  "For consumption on the premises" means that the

  5  food or drink sold may be immediately consumed on the premises

  6  where the dealer conducts his or her business. In determining

  7  whether an item of food is sold for immediate consumption,

  8  there shall be considered the customary consumption practices

  9  prevailing at the selling facility.

10         3.  "Premises" shall be construed broadly, and means,

11  but is not limited to, the lobby, aisle, or auditorium of a

12  theater; the seating, aisle, or parking area of an arena,

13  rink, or stadium; or the parking area of a drive-in or outdoor

14  theater. The premises of a caterer with respect to catered

15  meals or beverages shall be the place where such meals or

16  beverages are served.

17         4.  "Hot prepared food products" means those products,

18  items, or components which have been prepared for sale in a

19  heated condition and which are sold at any temperature that is

20  higher than the air temperature of the room or place where

21  they are sold. "Hot prepared food products," for the purposes

22  of this subsection, includes a combination of hot and cold

23  food items or components where a single price has been

24  established for the combination and the food products are sold

25  in such combination, such as a hot meal, a hot specialty dish

26  or serving, or a hot sandwich or hot pizza, including cold

27  components or side items.

28         (a)  There are exempt from the tax imposed by this

29  chapter food and drinks for human consumption except candy.

30  Unless the exemption provided by paragraph (7)(q) for school

31  lunches, paragraph (7)(i) for meals to certain patients or

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  1  inmates, paragraph (7)(k) for meals provided by certain

  2  nonprofit organizations, or paragraph (7)(z) for food or

  3  drinks sold through vending machines pertains, none of such

  4  items of food or drinks means:

  5         1.  Food or drinks served, prepared, or sold in or by

  6  restaurants; drugstores; lunch counters; cafeterias; hotels;

  7  amusement parks; racetracks; taverns; concession stands at

  8  arenas, auditoriums, carnivals, fairs, stadiums, theaters, or

  9  other like places of business; or by any business or place

10  required by law to be licensed by the Division of Hotels and

11  Restaurants of the Department of Business and Professional

12  Regulation, except bakery products sold in or by pastry shops,

13  doughnut shops, or like establishments for consumption off the

14  premises;

15         2.  Foods and drinks sold ready for immediate

16  consumption from vending machines, pushcarts, motor vehicles,

17  or any other form of vehicle;

18         3.  Soft drinks, which include, but are not limited to,

19  any nonalcoholic beverage, any preparation or beverage

20  commonly referred to as a "soft drink," or any noncarbonated

21  drink made from milk derivatives or tea, when sold in cans or

22  similar containers. The term "soft drink" does not include:

23  natural fruit or vegetable juices or their concentrates or

24  reconstituted natural concentrated fruit or vegetable juices,

25  whether frozen or unfrozen, dehydrated, powdered, granulated,

26  sweetened or unsweetened, seasoned with salt or spice, or

27  unseasoned; coffee or coffee substitutes; tea except when sold

28  in containers as provided herein; cocoa; products intended to

29  be mixed with milk; or natural fluid milk;

30         4.  Foods or drinks cooked or prepared on the seller's

31  premises and sold ready for immediate consumption either on or

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  1  off the premises, excluding bakery products for off-premises

  2  consumption unless such foods are taxed under subparagraph 1.

  3  or subparagraph 2.; or

  4         5.  Sandwiches sold ready for immediate consumption.

  5

  6  For the purposes of this paragraph, "seller's premises" shall

  7  be construed broadly, and means, but is not limited to, the

  8  lobby, aisle, or auditorium of a theater; the seating, aisle,

  9  or parking area of an arena, rink, or stadium; or the parking

10  area of a drive-in or outdoor theater. The premises of a

11  caterer with respect to catered meals or beverages shall be

12  the place where such meals or beverages are served.

13         (e)(b)1.  Food or drinks not exempt under paragraphs

14  (a), (b), (c), and (d) paragraph (a) shall be exempt,

15  notwithstanding those paragraphs that paragraph, when

16  purchased with food coupons or Special Supplemental Food

17  Program for Women, Infants, and Children vouchers issued under

18  authority of federal law.

19         2.  This paragraph is effective only while federal law

20  prohibits a state's participation in the federal food coupon

21  program or Special Supplemental Food Program for Women,

22  Infants, and Children if there is an official determination

23  that state or local sales taxes are collected within that

24  state on purchases of food or drinks with such coupons.

25         3.  This paragraph shall not apply to any food or

26  drinks on which federal law shall permit sales taxes without

27  penalty, such as termination of the state's participation.

28         4.  Notwithstanding any other provision of law, the

29  department shall make refunds or allow credits to a

30  distributor equal to the fee imposed and paid under s.

31  403.7197 on containers purchased by consumers with food

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  1  coupons or Special Supplemental Food Program for Women,

  2  Infants, and Children vouchers issued under authority of

  3  federal law.

  4         (2)  EXEMPTIONS; MEDICAL.--

  5         (a)  There shall be exempt from the tax imposed by this

  6  chapter any medical products and supplies product, supply, or

  7  medicine dispensed in a retail establishment by a pharmacist

  8  licensed by the state, according to an individual prescription

  9  or prescriptions written by a prescriber authorized by law to

10  prescribe medicinal drugs; hypodermic needles; hypodermic

11  syringes; chemical compounds and test kits used for the

12  diagnosis or treatment of human disease, illness, or injury;

13  and common household remedies recommended and generally sold

14  for internal or external use in the cure, mitigation,

15  treatment, or prevention of illness or disease in human

16  beings, but not including cosmetics or toilet articles,

17  notwithstanding the presence of medicinal ingredients therein,

18  according to a list prescribed and approved by the Department

19  of Health and Rehabilitative Services, which list shall be

20  certified to the Department of Revenue from time to time and

21  included in the rules promulgated by the Department of

22  Revenue. There shall also be exempt from the tax imposed by

23  this chapter artificial eyes and limbs; orthopedic shoes;

24  prescription eyeglasses and items incidental thereto or which

25  become a part thereof; dentures; hearing aids; crutches;

26  prosthetic and orthopedic appliances; and funerals.  In

27  addition, any items intended for one-time use which transfer

28  essential optical characteristics to contact lenses shall be

29  exempt from the tax imposed by this chapter; however, this

30  exemption shall apply only after $100,000 of the tax imposed

31  by this chapter on such items has been paid in any calendar

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  1  year by a taxpayer who claims the exemption in such year.

  2  Funeral directors shall pay tax on all tangible personal

  3  property used by them in their business.

  4         (b)  For the purposes of this subsection:

  5         1.  "Prosthetic and orthopedic appliances" means any

  6  apparatus, instrument, device, or equipment used to replace or

  7  substitute for any missing part of the body, to alleviate the

  8  malfunction of any part of the body, or to assist any disabled

  9  person in leading a normal life by facilitating such person's

10  mobility.  Such apparatus, instrument, device, or equipment

11  shall be exempted according to an individual prescription or

12  prescriptions written by a physician licensed under chapter

13  458, chapter 459, chapter 460, chapter 461, or chapter 466, or

14  according to a list prescribed and approved by the Department

15  of Health and Rehabilitative Services, which list shall be

16  certified to the Department of Revenue from time to time and

17  included in the rules promulgated by the Department of

18  Revenue.

19         2.  "Cosmetics" means articles intended to be rubbed,

20  poured, sprinkled, or sprayed on, introduced into, or

21  otherwise applied to the human body for cleansing,

22  beautifying, promoting attractiveness, or altering the

23  appearance and also means articles intended for use as a

24  compound of any such articles, including, but not limited to,

25  cold creams, suntan lotions, makeup, and body lotions.

26         3.  "Toilet articles" means any article advertised or

27  held out for sale for grooming purposes and those articles

28  that are customarily used for grooming purposes, regardless of

29  the name by which they may be known, including, but not

30  limited to, soap, toothpaste, hair spray, shaving products,

31  colognes, perfumes, shampoo, deodorant, and mouthwash.

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  1         4.  "Prescription" includes any order for drugs or

  2  medicinal supplies written or transmitted by any means of

  3  communication by a duly licensed practitioner authorized by

  4  the laws of the state to prescribe such drugs or medicinal

  5  supplies and intended to be dispensed by a pharmacist. The

  6  term also includes an orally transmitted order by the lawfully

  7  designated agent of such practitioner. The term also includes

  8  an order written or transmitted by a practitioner licensed to

  9  practice in a jurisdiction other than this state, but only if

10  the pharmacist called upon to dispense such order determines,

11  in the exercise of his or her professional judgment, that the

12  order is valid and necessary for the treatment of a chronic or

13  recurrent illness. The term also includes a pharmacist's order

14  for a product selected from the formulary created pursuant to

15  s. 465.186. A prescription may be retained in written form, or

16  the pharmacist may cause it to be recorded in a

17  data-processing system, provided that such order can be

18  produced in printed form upon lawful request.

19         5.  "Medical products and supplies" means and includes,

20  but is not limited to, such items as cotton, knives, sewing

21  and surgical needles, scissors, microscopes, x-ray machines,

22  I.V. administration sets, laboratory apparatus, surgeons'

23  gloves, ear syringes, and hospital beds.

24         (c)  Chlorine shall not be exempt from the tax imposed

25  by this chapter when used for the treatment of water in

26  swimming pools.

27         (d)  Lithotripters are exempt.

28         (e)  Human organs are exempt.

29         (f)  Sales of drugs to or by physicians, dentists,

30  veterinarians, and hospitals in connection with medical

31  treatment are exempt.

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  1         (g)  Medical products and supplies used in the cure,

  2  mitigation, alleviation, prevention, or treatment of injury,

  3  disease, or incapacity which are temporarily or permanently

  4  incorporated into a patient or client by a practitioner of the

  5  healing arts licensed in the state are exempt.

  6         (h)  The purchase by a veterinarian of commonly

  7  recognized substances possessing curative or remedial

  8  properties which are ordered and dispensed as treatment for a

  9  diagnosed health disorder by or on the prescription of a duly

10  licensed veterinarian, and which are applied to or consumed by

11  animals for alleviation of pain or the cure or prevention of

12  sickness, disease, or suffering are exempt. Also exempt are

13  the purchase by a veterinarian of antiseptics, absorbent

14  cotton, gauze for bandages, lotions, vitamins, and worm

15  remedies.

16         (i)  X-ray opaques, also known as opaque drugs and

17  radiopaque, such as the various opaque dyes and barium

18  sulphate, when used in connection with medical x-rays for

19  treatment of bodies of humans and animals, are exempt.

20         (j)  Parts, special attachments, special lettering, and

21  other like items that are added to or attached to tangible

22  personal property so that a handicapped person can use them

23  are exempt when such items are purchased by a person pursuant

24  to an individual prescription.

25         (k)(d)  This subsection shall be strictly construed and

26  enforced.

27         (7)  MISCELLANEOUS EXEMPTIONS.--

28         (q)  School books and school lunches.--This exemption

29  applies to school books used in regularly prescribed courses

30  of study, and to school lunches served to students, in public,

31  parochial, or nonprofit schools operated for and attended by

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  1  pupils of grades K through 1 though 12.  Yearbooks, magazines,

  2  newpapers, directories, bulletins, and similar publications

  3  distributed by such educational institutions to their students

  4  are also exempt. School books and food sold or served at

  5  community colleges and other institutions of higher learning

  6  are taxable.

  7         (qq)  Parent-teacher organizations, parent-teacher

  8  associations, and schools having grades K through

  9  12.--Parent-teacher organizations and associations qualified

10  as educational institutions under paragraph (o) associated

11  with schools having grades K through 12, and schools having

12  grades K through 12, may pay tax to their suppliers on the

13  cost price of school materials and supplies purchased, rented,

14  or leased for resale or rental to students in grades K through

15  12, including items used for fund-raising purposes or sold

16  through vending machines located on the school premises, in

17  lieu of collecting the tax imposed by this chapter from the

18  student. The tax paid to the supplier may be included in the

19  sale price of the school materials and supplies to the student

20  or public. This paragraph does not apply to sales of food and

21  beverages through vending machines that are not operated by

22  qualified parent-teacher organizations, parent-teacher

23  associations, and schools having grades K through 12 on the

24  school's premises, other than sales of food or beverages

25  through vending machines located in the student lunchroom or

26  dining room of a school having grades K through 12.

27         (rr)  Mobile home lot improvements.--Items purchased by

28  developers for use in making improvements to a mobile home lot

29  owned by the developer may be purchased tax-exempt as a sale

30  for resale if made pursuant to a contract that requires the

31  developer to sell a mobile home to a purchaser, place the

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  1  mobile home on the lot, and make the improvements to the lot

  2  for a single lump-sum price. The developer must collect and

  3  remit sales tax on the entire lump-sum price.

  4         (ss)  Veterans Administration.--When a veteran of the

  5  armed forces purchases an aircraft, boat, mobile home, motor

  6  vehicle, or other vehicle from a dealer pursuant to the

  7  provisions of s. 3902(a), Title 38, United States Code, or any

  8  successor provision of the United States Code, the amount that

  9  is paid directly to the dealer by the Veterans Administration

10  is not taxable. However, any portion of the purchase price

11  which is paid directly to the dealer by the veteran is

12  taxable.

13         (tt)  Complimentary items.--There is exempt from the

14  tax imposed by this chapter:

15         1.  Any food or drink, whether or not cooked or

16  prepared on the premises, provided without charge as a sample

17  or for the convenience of customers by a dealer that primarily

18  sells food product items at retail.

19         2.  Any item given to a customer as part of a price

20  guarantee plan related to point-of-sale errors by a dealer

21  that primarily sells food products at retail.

22

23  The exemptions in this paragraph do not apply to businesses

24  with the primary activity of serving prepared meals or

25  alcoholic beverages for immediate consumption.

26         (uu)  Donated foods or beverages.--Any food or beverage

27  donated by a dealer that sells food products at retail to a

28  food bank or an organization that holds a current exemption

29  from federal corporate income tax pursuant to s. 501(c) of the

30  Internal Revenue Code of 1986, as amended, is exempt from the

31  tax imposed by this chapter.

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  1         (8)  PARTIAL EXEMPTIONS; VESSELS ENGAGED IN INTERSTATE

  2  OR FOREIGN COMMERCE.--

  3         (a)  The sale or use of vessels and parts thereof used

  4  to transport persons or property in interstate or foreign

  5  commerce, including commercial fishing vessels, is subject to

  6  the taxes imposed in this chapter only to the extent provided

  7  herein.  The basis of the tax shall be the ratio of intrastate

  8  mileage to interstate or foreign mileage traveled by the

  9  carrier's vessels which were used in interstate or foreign

10  commerce and which had at least some Florida mileage during

11  the previous fiscal year.  The ratio would be determined at

12  the close of the carrier's fiscal year.  This ratio shall be

13  applied each month to the total Florida purchases of such

14  vessels and parts thereof which are used in Florida to

15  establish that portion of the total used and consumed in

16  intrastate movement and subject to the tax at the applicable

17  rate.  The basis for imposition of any discretionary surtax

18  shall be as set forth in s. 212.054. Items, appropriate to

19  carry out the purposes for which a vessel is designed or

20  equipped and used, purchased by the owner, operator, or agent

21  of a vessel for use on board such vessel shall be deemed to be

22  parts of the vessel upon which the same are used or consumed.

23  Vessels and parts thereof used to transport persons or

24  property in interstate and foreign commerce are hereby

25  determined to be susceptible to a distinct and separate

26  classification for taxation under the provisions of this

27  chapter.  Vessels and parts thereof used exclusively in

28  intrastate commerce do not qualify for the proration of tax.

29         (14)  TECHNICAL ASSISTANCE ADVISORY COMMITTEE.--

30         (a)  The department shall establish a technical

31  assistance advisory committee with public and private sector

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  1  members, including representatives of both manufacturers and

  2  retailers, to advise the Department of Revenue and the

  3  Department of Children and Family Health and Rehabilitative

  4  Services in determining the taxability of specific products

  5  and product lines pursuant to subsection (1) and paragraph

  6  (2)(a).  In determining taxability and in preparing a list of

  7  specific products and product lines that which are or are not

  8  taxable, the committee shall not be subject to the provisions

  9  of chapter 120. Private sector members shall not be

10  compensated for serving on the committee.

11         (b)  The department, with the advice of the committee,

12  shall develop guidelines for determining the taxability of

13  specific products. The guidelines shall not be subject to the

14  provisions of chapter 120 and shall be a public record. In

15  developing the guidelines, if the department determines that a

16  proposed guideline substantially affects a particular person,

17  it shall notify the person of the development of the proposed

18  guideline. The guidelines shall be submitted to the

19  Administrative Procedures Committee and the department shall

20  respond to any comments made by the committee or to any person

21  substantially affected by the guidelines.

22         (c)  The advisory committee shall use guidelines

23  determined by the department in making its recommendations.

24  The committee shall forward its recommendations to the

25  department, which shall determine the taxability of specific

26  products. The determination is a public record, is final upon

27  its publication, and shall remain effective unless a change of

28  determination is published. The determination may be

29  challenged pursuant to a proceeding conducted under ss.

30  120.569 and 120.57.

31

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  1         (d)  The department may develop a central database and

  2  publish the determination as to the taxability of specific

  3  products in a manner that generally provides retailers with

  4  information to properly tax products based on their universal

  5  product codes. To assure maximum benefit to the retail

  6  community, the advisory committee shall help in identifying

  7  the scope of information that should be included in the

  8  central database and the appropriate methods to assure

  9  efficient and effective communication. Information contained

10  in the central database shall not be subject to the provisions

11  of chapter 120 and shall be a public record.

12         Section 2.  This act shall take effect July 1, 1998.

13

14            *****************************************

15                          SENATE SUMMARY

16    Revises the exemption from the state sales tax provided
      for food and drinks. Specifies the food products that are
17    subject to the tax. Exempts certain food, drinks, and
      other items from the sales tax if the items are provided
18    to customers on a complimentary basis by a retail dealer.
      Exempts food and beverages from the sales tax if such
19    items are donated to a tax-exempt organization. Provides
      for the Department of Revenue to determine the taxability
20    of specific products and publish its determinations.
      Exempts additional medical supplies and equipment;
21    yearbooks, magazines, and other printed materials
      distributed by educational institutions to their
22    students; materials and supplies furnished to students in
      grades K-12 by schools or parent-teacher associations or
23    organizations; mobile home lot improvements; and
      aircraft, boats, mobile homes, and vehicles purchased in
24    whole or in part with support from the Veterans
      Administration. Provides a partial exemption for
25    commercial fishing vessels in the same manner as is
      provided to vessels in interstate or foreign commerce.
26

27

28

29

30

31

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